MGEB11 Quantitative Methods in Economics I

Fall 2020
Lecture 1

Chapter 1. What is Statistics (Quantitative Methods)?

Example 1. There are 360 students in MGEB11 this

semester. We want to find out
(a) the percent of students who worked last summer.
(b) for students who worked last summer, what is the
average hourly pay? say this is the data :

Solution:

÷÷#
population
StkedyPay$
#5

% sin:#iii. worked
#

b) µ =
average hourly pay
360 Yes 10

From the data say ,

200 of them worked .

And say their pay combined is $2350 hourly .

From the data ,

we calculate

a) p =

200360 =
percent
last
worked
summer

b) µ
= l5t-_
200
2325% = ii. 75

ttere.pe#aedparameers .

Page 1 of 11
 Example 2. There are lots of students in Canada. We want
to find out
(a) the percent of students who worked last summer.
(b) for students who worked last summer, what is the
average hourly pay?
BO

Solution. N size -
-

% of students worked

population
Find p
=

µ =
average hourly pay

N is
large
⑧

Population is too large for us to

get data for everyone in the population .

The best that do is to select subset of the We call

we can a population .

this subset a sample .

For example , we select n

-
-
ooo students .

popyyaIiaornge@topoopuYage.n
of a
\

this is the sample data

say
.

out of the 600 the # of

say
-
,

studen-tworkedttwrypayss.tvdents that work is 420

erase } " " m""

Team'oInFi¥¥mY
"
" "
id

600 No -

API Ended
{
'
F 70% worked
-

-
=
.

point
estimators or
19 t 15 t ly t 18 .
5145
12 25
. .
-

=
=
X
To -420
.
=

statistics
sample
Page 2 of 11
15 and I estimate
p
and µ .
We
get the value
off and I from the sample , and the sample

estimates the value of the parameters We estimate statistics

.

parameters using sample .

Statistics is a
procedure to draw conclusions on a population based on information from a
sample .

To
study statistics , we
approach the topics in the
following way
:

𝐷𝑒𝑠𝑐𝑟𝑖𝑝𝑡𝑖𝑣𝑒 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠
Statistics{
𝐼𝑛𝑓𝑒𝑟𝑒𝑛𝑡𝑖𝑎𝑙 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠

• After data are observed from the whole population or a

sample, descriptive statistics describes the data.
Examples of Descriptive statistics are graphs,
average salary in a company, percent of voters in
favour of a policy, etc.
• Inferential statistics is a procedure to draw conclusions
on a population based on the information from a
sample.
Examples of Inferential statistics are making a
conclusion to mass produce a product based on the
sales in a sample.

The key subject to study statistics is the study of Inferential

Statistics.

Page 4 of 11
 Chapter 2. Descriptive Statistics – Graphs
Presenting your data using graphs
Example. Age distribution in a population or sample.

Number of
BAR CHART
pneople
-

1¥ . .
..

÷÷÷¥
' '

¥ E

Page 5 of 11
Example. Market Shares of computers in Canada.

Borchert

..

Piechart

÷÷i÷÷
Page 6 of 11
Example. House price in Toronto since 1998.

House Price $

I
•

•
,

* •

B
•

#Year
1998 1999 2000 2019

Example. Age and Income in Toronto.

Income

l •

20
•

21
•

22
B
b or
• B
B O
,
B

Age

Page 7 of 11
 A graph summarises the data and present it to the audience
in a picture. There is no unique way to draw graphs. A
good graph is a graph that informs the audience what the
data represent. Many computer softwares produce graphs
from data. Microsoft Excel is a good start to draw graphs
from data.

Chapter 3. Descriptive Statistics – Numerical Measures

1. Measures of Centre (Location)

• Average (Mean) is the centre of all the numerical values .

Let Xi , xz ,
.
. .

. X n be observation for the whole population on size N .

The
average ( mean ) is denoted by M and is defined as :

µ=÷÷rageinpopuatiofieN I=I§!xi=arerageinasampleofsizer
Let x , , xz ,
. . .

, x n
be observations in a sample of size n .
The sample
average
is denoted by I and is

defined as I = I ¥ ,
x
i
=
sample average

The mean is the most commonly used measure of centre .

x¥xi
mean

The like the centre of gravity However the

mean is .

, mean is sensitive to extremely large

or
extremely small valves .

Page 8 of 11
 • Median
The median is the value in the middle when the data is
arranged by the order of
magnitude .

Examples :

I5, -

8 ,
-

8 , O , O, 3 ,
4 , I 0 ,
l l ,
l l

T
median

I5, -
8 -

8 O O 3, 4 I0 l l
, , ,
-
, , ,
Page 9 of 11
T
median
→ OIL = I 5
.
 • Mode
The value that occurs most often .

Examples :

10 -3 , -3 0,0 , I 1,4 , 4,4 10,12 mode H

-
-
, , , ,

10 , -3 , -3 , 0,0 , 1,1 , 1,414,4 , 10,12 mode -_

1,4 ( Bimodel )

10 , -3,011,4/11,12 no mode

Page 10 of 11
 • Percentiles

2. Measures of Variation (Spread)

• Range
• Variance and Standard Deviation
• Coefficient of Variation

Page 11 of 11